Sarah Bradford explains how the tax exemption for staff suggestion scheme awards can encourage employees to engage in the business.
Employees often have valuable ideas as to changes which can be made to make the business more efficient or to save money. A staff suggestion scheme can be a useful way of tapping into employees’ knowledge, with the possibility of an award providing an incentive to get involved.
Suggestion scheme awards can be made free of tax and National Insurance contributions (NICs) up to certain limits. The limit depends on the type of award. The suggestion scheme legislation recognises two types of award – encouragement awards and financial benefit awards. The legislation containing the statutory tax exemption is found in ITEPA 2003, ss 321 and 322.
Conditions for exemption
